As a business coach our clients are always shocked during our business financial literacy modules. We start of giving a list of scenarios for our students to answer.
The main scenario we scenario we put forth is “You’re at the store, you realize you don’t have enough money for your personal groceries on your debit card, so you pull out your business card to pay the difference.” As the CEO you have the right and authority to do so. The answer is “No” and in fact your financial records could be subject to an audit at anytime. Below we provide our top 3 tips to establishing financial integrity within your small business.
1. You are the owner however the income belongs to the business
Essentially as the small business owner with limited staff you not only become the owner you also become an employee or contractor of the organization. Which means that you should be receiving your income directly from the organization through a third party payment processing company. This will ensure that all legal and state requirements for payroll distribution are met and that you don’t break the corporate veil . Although I am the owner of The B.O.M.B Mentoring group, I am also a lead coach, my company has to pay me for my services. To ensure that there is no cross handling of funds. We utilize third party payroll systems like payable and square. They require low transactions cost and scale your fees according to the number of payroll requests initiated each month.
2. Have two different bank accounts with two different banks
The separate but equal principle does not apply when creating financial management strategies for your small business. Compiling your personal and business accounts at the same bank, can breed disaster, especially if you’re in a rush or are in between client payments and you need that hold me over funding that you say you’ll put back but of course you never do. After a while you’re fingers become transfer trigger happy causing a downward financial spiral. Establishing separate accounts helps you to easily manage your accounts and void mismanaging your funds. Separating the accounts recognizes the business as a stand alone entity. Establishing a business relationship with your local branch can also lead to future business collaborations. One of my banks sees me as Keandra Ward, the others view me as Keandra Ward CEO. I prefer a traditional bank for my personal and credit union for my business due to their low fees and the additional benefits designed specifically for business owners.
3. Proper bookkeeping is essential to your businesses growth
Treat your small business like the big businesses. Proper book keeping is essential to businesses of every size, even as a small/solo-preneur business. With proper booking keeping we were able to print the documents needed for our 2017 taxes in less than five minutes. Utilizing software programs such as zipbook.com and quickbooks.com provides you the opportunity to establish your book keeping on the same level as corporate entities with complimentary services such as accounting, invoicing, payment, payroll, recurring billing and more all under one platform.
Keandra Ward, a strategic business analyst and personal development strategist at The B.O.M.B Mentoring Group ( Bold Operations for Managing Business),I currently have a B.A. in Psychology from the University of South Florida and a Masters Degree in Internet Marketing. I have been a small business owner for over twenty years.